Fears for those who pay 60% on credit card

One million desperate consumers shunned by High Street banks have turned to a sub-prime credit card charging rates of 60%.

Fear factor: Many families are getting deeper into debt

Credit firm Provident Financial has revealed it receives around 2,700 applications a day for its Vanquis credit card.

This card is traditionally aimed at borrowers who have a bad credit history and have been turned down by more well-known firms. But there are fears many middle-class families turned away by High Street banks are now choosing this high-interest credit.

Average rates are 39.9%, but some will be charged up to 59.9% for their spending.

The financial crisis has left thousands of families living on credit. Figures released by the Bank of England revealed UK consumers owed a staggering £61.5bn to credit card companies in January - an increase of 15% on the previous year.

Many families are being refused credit by the High Street banks, as they cut back on customers they deem to be at risk of missing their repayments.

Some have had accounts closed, while others have seen their interest rate hiked. Even those who have failed to pay one bill on time are turned down for the best deals.

Even Provident admitted it was forced to reject around 830,000 applications - though it still has 426,000 customers.

This prompted concerns that more consumers would be forced into the hands of doorstep lenders and payday loans companies, which can have eye-watering rates of up to 3,000%.

Chris Tapp, director of debt charity Credit Action, says: 'The fear is that many people will have to turn to payday loans companies or doorstep lenders which can charge exceptionally high amounts.'

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